By Stephen Kirkland and Shiyin Chen - Sep 21, 2011 7:03 PM GMT+0700
European stocks fell after officials said they plan to return to Greece next week to complete a review of the economy. U.S. index futures declined while the dollar gained before the Federal Reserve concludes a two-day meeting.
The Stoxx Europe 600 Index lost 1 percent at 8 a.m. in New York and Standard & Poor’s 500 Index futures slid 0.3 percent. The Dollar Index advanced 0.3 percent. The Swiss franc weakened against most of its 16 major peers, and the pound dropped 0.6 percent versus the dollar after the Bank of England said officials considered ways to add stimulus to the economy. The 30-year U.S. Treasury yield added two basis points, with the German two-year note yield falling three basis points.
A “full mission” will return to Athens next week after Greek Finance Minister Evangelos Venizelos made “good progress” in talks with the European Union and the International Monetary Fund yesterday, according to the EU. The Fed may say today it will replace short-term Treasuries in its $1.65 trillion portfolio with long-term bonds, a move that 61 percent of economists surveyed by Bloomberg said will probably fail to lower the U.S.’s 9.1 percent unemployment rate.
“We’re seeing some big slowdowns in Europe and the U.S.,” Mark Burgess, chief investment officer at Threadneedle Investments, said in a Bloomberg Television interview in Hong Kong. “A Greek default is a certainty, but in the grand scheme of things, Greece is not that relevant. The issue is really whether they can contain it.”
Peugeot, Daimler
About three shares declined for every one that gained in the Stoxx 600, which jumped 1.8 percent yesterday. Automakers were the biggest drag on the index, as PSA Peugeot Citroen and Daimler AG lost more than 2.5 percent. Deutsche Lufthansa AG sank 4.2 percent as Europe’s second-largest airline said it expects fuel expenses to climb and Deutsche Bank AG downgraded the shares.
S&P 500 futures reversed an earlier gain of as much as 0.6 percent. Oracle Corp. rose 3.2 percent in German trading after the software maker reported profit that topped analysts’ estimates, boosted by increased spending on database programs and applications that help run businesses.
Sales of existing homes dropped in July to the lowest since November, and the median price slid 4.4 percent from a year earlier, according to a Bloomberg survey of economists. Rising foreclosures, tighter lending standards and unemployment stuck near 9 percent for more than two years are all weighing on the market. The Fed is scheduled to issue its policy statement at about 2:15 p.m. in Washington.
Dollar, Euro
The Dollar Index, which tracks the U.S. currency against those of six trading partners, climbed for the third time in the past four days, while the euro weakened 0.3 percent versus the greenback and slid 0.5 percent against the yen. The Swiss franc depreciated 0.4 percent against the euro and lost 0.7 percent versus the dollar, falling for the fourth consecutive day.
The yield on the Italian two-year note rose seven basis points to 4.36 percent, while the 10-year yield increased two basis points. That left the difference in yield with benchmark German bunds three basis points wider at 396 basis points. The Greek two-year note yield jumped 122 basis points to 65.41 percent, rising for the third consecutive day.
The MSCI Emerging Markets Index fell 0.6 percent, heading for the lowest close since July 2010. Russia’s Micex Index retreated 0.4 percent as oil declined. Indonesia’s Jakarta Composite index (JCI) slid 1.5 percent as the nation’s domestic vehicle sales slowed in August.
The Shanghai Composite Index jumped 2.7 percent after the Conference Board said its leading indicator index rose in July. The Czech PX Index rose 2 percent, led by power utility CEZ AS after newspaper Lidove Noviny reported domestic energy companies will get some carbon-dioxide permits for free until 2020.
Oil slid 0.7 percent to $86.30 a barrel in New York. Copper dropped 0.8 percent in London.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
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